Costco’s Profit Falls Just Short of Investors’ High Expectations

(Bloomberg) -- Costco Wholesale Corp. reported quarterly profit that fell short of estimates, and U.S. sales, while still brisk, also slightly missed. The company’s shares fell in late trading.

• Same-store U.S. sales excluding gas rose 5.2% in the quarter, falling just short of analysts’ projections compiled by Consensus Metrix. Earnings per share were $2.47, below the average estimate of $2.54.

Key Insights

• Costco already reported sales for most of the quarter, so investors were also watching metrics like membership fee growth and member renewal rates. Revenue from membership fees rose in the quarter -- and that’s a positive sign for the retailer since those annual dues generate a bulk of Costco’s profit.
• The retailer’s treasure hunt store experience is hard for other retailers to match, but it’s still in the early innings of its e-commerce expansion. Online sales rose 21.9% in the latest quarter at Costco.
• Costco’s quarterly report was light on details. Management will share more details on its analyst call at 5 p.m.

Market Reaction

• Costco slipped as much as 3.5% in after-hours trading before paring some of the losses. Shares had gained 42% through Thursday’s close, compared to the 16% increase in the S&P 500.
• For more on the numbers, click here

To contact the reporter on this story: Matthew Boyle in New York at mboyle20@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Jonathan Roeder

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